UK retailers have been slow to adopt electronic shelf labels but with the proliferation of dynamic pricing this could be about to change, discovers Retail Focus.
Electronic shelf labelling (ESL) is not a new technology, but it is yet to be widely adopted in the UK. This is possibly because the high costs of implementation have been too much for retailers to justify investment. However, with prices coming down and new developments in the technology, things could be about to change.
ESLs enable retailers to adjust pricing information quickly and efficiently from a central server. This is a huge benefit when you consider that Tesco, for example, manually changes between five and 10 million shelf edge labels every week. Time that Tesco chief information officer, Mike McNamara says could be better spent serving customers. Another benefit of the technology, notes McNamara, is that it provides even more confidence that the price on the shelf edge is correct. ‘When we are changing 10 million labels, mistakes can happen,’ he says. ‘With electronic labels, prices are changed instantly. That means that the price on the shelf will always be the same as the price at the till.’
Tesco is already using ESLs in some of its other markets, including Hungary, and is currently trialling the technology in its Letchworth Express store in Hertfordshire and its Enfield Superstore.
Niclas Qvist, head of marketing and partner management at Pricer, believes that once Tesco begins rolling out ESLs the UK market will follow suit.
Earlier this year, Pricer announced that it had been working with French retailer, Carrefour to improve the customer shopping experience at its store in Villeneuve la Garenne, France. The company developed an integrated solution using geolocalisation, mobile shopping and graphic SmartTAG electronic shelf labels.
The mobile app, produced specially for Carrefour, is called ‘C-où’ and allows customers to create shopping lists, search products, get promotions and find recipe ideas. It also features geolocalisation; once a customer is inside the store, the app helps them find any product and optimises their shopping route through indoor navigation.
In addition, the store has been equipped throughout with more than 55,000 Pricer NFC-enabled ESLs, which not only offer centralised price automation but allow customers to access more information about a product. Customers can even ‘like’ a product with their smartphone and the label will display the total number of ‘likes’.
‘NFC capability is opening a whole new world of functionality based on personal hardware (such as smartphones), as opposed to heavy investment into specialty hardware at store level,’ claims Qvist.
Last year, DIY chain B&Q revealed that it was looking into variable pricing based on the model used by hotels and airlines. The system would allow prices to be changed depending on the time and day of the week, and the customer’s profile.
Dynamic pricing, or real-time pricing, is a practice that has been used in the travel and leisure industries for some years and one that is moving closer to becoming the norm in retail, believes Vol Pigrukh, CEO and cofounder of Profitero, the global provider of online insights for retailers and brands. ‘The growth of smartphones and tablets has brought about increased price transparency for shoppers, largely driven by Amazon,’ says Pigrukh.
‘With the continued rise in online shopping and price transparency, developing accurate pricing and demand forecasting strategies is of critical importance for retailers,’ continues Pigrukh. ‘Profitero data reveals that Amazon.com makes up to 2.5 million price changes every day, therefore, it’s key for both bricks-and-mortar and online retailers to stay price competitive.’
However, Pigrukh goes on to warn that price changes must be aligned across the online channel and in-store operation: ‘Otherwise, you have a situation where online and stores are operating in silos, which clearly doesn’t result in a good customer experience.’
Displaydata, a global provider of dynamic digital display solutions, argues that bricks-and-mortar retailers have long been at a disadvantage relative to their online counterparts due to their limited ability to update in-store pricing in real-time to reflect current competitive decisions but ESLs can remove this barrier. The company has recently partnered with 360pi, a specialist in retail price and product intelligence, to give physical stores the ability to employ dynamic pricing.
‘We help retailers to execute their in-store price and promotional changes more efficiently and effectively,’ states Glenn Haertel, SVP sales Americas at Displaydata. ‘Our fully graphic paper-white ESLs are able to display price as well as richer product information, including QR codes and customer reviews, giving shoppers the same buying experience in-store as they would have online.’
Increasing the frequency of price changes is in the future for all bricks-and-mortar stores; it is just a question of how to execute it, claim Roy Horgan, CEO at Market Hub, and Stephen Millard, CEO at Eccomplished. ‘Since it is clear that dynamic pricing has altered the centre of gravity in retailing, every retailer will be forced to respond with the use of new technology,’ says Horgan.
Robert Browne, partner at KPMG in the UK, agrees that in the near future, product popularity, inventory levels, time and location and many other criteria will drive prices, and believes that companies will use electronic price tags to facilitate implementation.